Wednesday, January 10, 2018

The Gap Between The EU And The US Will Continue To Widen -- January 10, 2018

On the day that Toyota/Mazda announced a new $1.6 billion automobile plant to be built in Alabama, Reuters is reporting that "German industrial workers widen their strikes in wage dispute."

So, guess how much German workers want in wage increases? 1%? 2%? 3%? Nope, double that, 6%.

But not only that, they want shorter hours (I assume the hours will be the same number of minutes as before, but they want fewer hours, not shorter hours -- perhaps a shorter work-week is what the writer meant).

The strike for a shorter work-week comes on top of the 35-hour work week Germans already have.

According to the article, "workers have drawn a line in the sand."

So how many hours do the Germans want to work. 30 hours/week? LOL.

No, they want to go to four seven-hour days, 28 hours in total. Or if they work five days, less than three hours before lunch and less than three hours after lunch.

Plus generous maternity and paternity leave. And vacation time. And sick days. And mental health days. And snow days.

Angela Merkel is unable to form a government; something tells me the unions are going to win on this one.

If the union wins, I wonder if CNBC will talk about the potential demise of the "synchronized global economy"?

Later: a reader sent me a story explaining how this all came about -- Germany signed the “guest worker” agreement with Turkey 50 years ago which allowed companies to fill empty workplaces with Turks and changed the country forever. Süleyman Cözmez was one of the thousands who came – and and stayed. Link here.

Speaking Of Things Going Sour In Paradise, Just How Bad Is It In California?

President Governor Jerry Brown raises prospect of pension cuts "in downturn."

I was unaware there was a "downturn" in California -- oh, I see -- Governor Moonbeam is talking about the next downturn. Right now, everything is hunky dory.

From Bloomberg:
California Governor Jerry Brown said legal rulings may clear the way for making cuts to public pension benefits, which would go against long-standing assumptions and potentially provide financial relief to the state and its local governments.
Brown said he has a "hunch" the courts would "modify" the so-called California rule, which holds that benefits promised to public employees can’t be rolled back. The state’s Supreme Court is set to hear a case in which lower courts ruled that reductions to pensions are permissible if the payments remain “reasonable” for workers.
I wonder if president-in-waiting, Ms Winfrey, would support the governor.

My hunch: the court will say, "no way, Jose."

Weather-Related Events Affecting Bakken Production? January 10, 2018

Some analysts are suggesting that the drawdown in US crude oil inventories (reported January 10, 2018; EIA) was due to weather-related events in the Bakken.

We probably won't know until the January, 2018, data is released in the March, 2018, Director's Cut.

If you were working in the Bakken these last couple of weeks, it would be interesting to hear your perspective, either through comments to the post or at the poll at the sidebar in which you can leave comments.

Another Stretch

Wow, talk about another stretch. Speaking of airheads, at least one Reuters' analyst suggested that the market's "fall" today was due to uncertainty about NAFTA. LOL.

The Dow has set 70+ new intra-day records since President Trump was elected. I think it had a string of three or four consecutive records in the past week or so.

Today, the market was down over 100 points before it opened, and yet during the day, it showed signs of closing at another new high. It finished the day, off 17 points, or a drop of 0.07%. And then this from Reuters talking about the lack of progress on NAFTA:
Wall Street’s major stock indexes ended lower on Wednesday, partly due to those worries.  
Yes, it appears, based on a drop of 17 points on the Dow today, we are coming to the end of the "synchronized global economy."  Wow, I can't make this stuff up.

My Best Christmas Gift This Year

Lincoln Logs.

Okay. That was one of Sophia's presents. Not mine.

But it's the one gift the two of us love working on together. She is very, very good at putting on the roof(s).

I had Lincoln Logs as a kid (what boy in Williston, North Dakota, in the 1950's did not?). I remember the real wood, the real dark red/brown and the green flats.

The logs these days don't feel like "real wood" but apparently they are. The box says "real wood" and so do two websites. This may explain it: the company that makes Lincoln Logs is the same company that makes golf tees -- and with both golf tees and these Lincoln Logs there is a real feel of a glossy or lacquered finish. I don't like them as much as the Lincoln Logs I had but in the big scheme of things, no big deal.

I was unaware that Frank Lloyd Wright's second son invented Lincoln Logs and I was unaware that there was a failed attempt to change to plastic, and produce them in China. They are now made in the US, production having moved back in 2016. Making America great again.

Random Update Of The Tyler Formation In North Dakota -- January 10, 2018

I follow North Dakota's Tyler Formation here.

Today a reader alerted me to "a new assessment" of the Tyler by the North Dakota Geological Survey. [Update: I thought I had posted this study before but couldn't remember. Now that I've had a few minutes to look, yes, I did post this survey, back in July, 2017. Whoo-hoo!]

The link will take you to an html site, but a google search will take you to a link that will allow ou to download the PDF which will be much more useful. The PDF will include graphics. The html linked above, does not.

The survey was published last summer (2017).

The introduction begins:
Beginning in late 2010, on the heels of the emerging Bakken play, the North Dakota Geological Survey published a series of maps and reports on the resource potential of the Tyler Formation. Mineral rights leasing in prospective Tyler acreage began to take off accompanied by a significant amount of media attention.
The Tyler was speculated during that time to eventually emerge as another Bakken-like unconventional resource play. During September 2013 to August 2014, two horizontal test wells, the Rundle Trust 21-29TH and the Powell 31-27TH (figs. 1 & 2), were drilled in the Tyler Formation and stimulated using multi-stage hydraulic fracture completions. Although both wells went on to produce oil with some associated gas, the production rates were relatively low. Oil prices proceeded to collapse in late 2014, shortly after these test wells were completed.
Two of the summary remarks:
  • even though the production rates were low, the Rundle Trust 21-29TH shows that the upper Tyler carbonate beds are capable of producing oil in an unconventional completion. The question still remains of how much they are capable of producing.
  • the usage of water-based (particularly fresh water) drilling mud and completion fluid should be avoided within the upper Tyler Formation. Diesel or oil-based drilling fluids are preferred because they help maintain wellbore integrity and also may limit damage to the formation if water sensitive clays are present. A non-water frac fluid may be more costly, but could ultimately prove to be the key to unlocking the Tyler’s resource play potential

A reader asked me whether we might see new drilling in the Tyler any time soon. The reader was focused on the price of WTI as a significant data point determining if any operator would drill the Tyler.

I suggested to the reader that in addition to price, other factors need to be considered:
My hunch is there are at least three variables:
a) price, as you noted
b) availability of work force; right now, the Permian is really competing for human resources
c) new operators coming into North Dakota are probably sticking to tried-and-true Bakken

I also think that if the price goes up appreciably, before they go to the Tyler, they will go back to the "periphery" of the Bakken -- trying to expand the "sweet spots.
The reader was interested what others might think. Please feel free to comment.

In addition, I will post a poll asking readers what they think about the chance for new drilling in the Tyler. Note: readers are allowed to post comments unlike most polls posted.

Ford F-150 vs the Tesla Pick-Up

According to the poll, if given only two choices, 98% of respondents would choose a Ford F-150 over the proposed Tesla pick-up.

New Operator In The Bakken? Future Acquisition Company, LLC -- January 10, 2018

In today's daily activity report: Future Acquisition Company, LLC. I think this is the first time I've seen this company mentioned in North Dakota. According to the NDIC, the company has eleven (11) oil and gas wells/permits, all up in the northwest corner of the state. I only checked a couple, but it appears the wells were acquired from Mountain Divide, LLC.

Based on a bankruptcy filing ("notice of hearing") dated November 22, 2016, it appears that two companies were interested in the assets of Mountain Divide. The two companies: Future Acquisition, LLC; and, Deep River Operating, LLC.

Future Acquisition's website is here.

I do not see Deep River Operating at the NDIC well search site (yet).

Making America Great -- A Record Year For Natural Gas -- January 10, 2018

This is for the archives more than anything else. From Bloomberg:
  • America's gas production is forecast to set new records this year and next
  • huge surge year-over-year
  • the "extra" 7 billion cubic feet of gas production expected in 2018 to be produced in the US equals the entire output of Turkmenistan -- one of the world's largest gas exporters
Two reasons for this surge
Two big reasons for this are logistics and oil. Pipelines able to carry roughly 7 billion cubic feet of gas a day away from the prolific Appalachian region are due to start up this year, allowing production that's been bottled up in the East to flood out. Meanwhile, rising oil production in the Permian shale basin and elsewhere will bring increased quantities of associated gas.

Tracking The Russian LNG Vessel Bringing LNG To New England, Despite Sanctions -- January 10, 2018

Here we go again. For those who want to track another ocean-going vessel, one can track the Christophe De Margerie over at MarineTraffic while following this story (the story was previously posted but I am not sure we had the name of the vessel):
Reuters is reporting that "US may get first LNG from Russia despite sanctions --
A vessel that may be carrying liquefied natural gas from Russia's new Yamal LNG export terminal could be heading to the United States despite sanctions against the company that operates the Russian facility.
The tanker Chris. De Margerie picked up a cargo from Novatek PAO's Yamal facility, Russia's second LNG export terminal, on Dec. 9 and dropped it off at National Grid Plc's Isle of Grain LNG facility near London on Dec. 28, according to Thomson Reuters data.
Since then, Engie SA's Gaselys LNG tanker picked up LNG from the UK facility on Dec. 30 and is expected to arrive in Boston on January 22, 2018.
It is possible that some of the LNG on the Gaselys is from Yamal, according to a report by S&P Global Platts. Reuters has not independently verified that report, but the shipping data does show the routes the tankers are taking. The final destination could change.
At this link, go directly to the vessel, Christophe De Margerie.

The Marine Traffic link is here.

Enjoy, have fun.

Tag: transponder, tracking.

9.8 Million; 10 Million; Now 11 Million -- January 10, 2018

EIA now says US crude oil production is expected to climb to more than 10 million bbls early in 2018, and will then hit an all-time high in 2019, supassing 11 million bopd. Reuters is reporting:
Much of the production growth will be concentrated in the Permian Basin, the largest U.S. oilfield stretching across Texas and New Mexico, said John Staub, the EIA director of the office of petroleum, natural gas and biofuels analysis. As a result, pipeline capacity constraints should not be a major limiting factor in starting new production, he said.
Despite the rising production, oil prices edged higher on Tuesday, with U.S. crude touching its highest since December 2014. The market was supported by OPEC-led production cuts and expectations that U.S. crude inventories have dropped for an eighth week. Oil traders have closely watched U.S. crude production to see whether output gains from U.S. shale formations will surpass the 1.8 million bpd cuts.
U.S. demand growth of 150,000 bpd was estimated for 2017, slightly lower than previous expectations. The agency increased its demand estimates for 2018 to 470,000 bpd from 410,000 bpd. Demand is expected to climb an additional 340,000 bpd in 2019 to 20.65 million bpd, the agency said.
Meanwhile, OPEC's cuts creating havoc among owners of supertankers that shuttle fuel between continents. Bloomberg is reporting:
The ships’ average earnings plunged last year by more than half to levels not seen since 2009 and far below what shipping analysts had been predicting. Now, the producer group’s extension of output cuts throughout 2018 is adding to the downturn.
“These cuts reduced the number of cargoes from the Middle East to Asia significantly at a time when a large amount of newly-built vessels are being delivered,” Olivier Jakob, managing director at Petromatrix GmbH in Zug, Switzerland, said in a phone interview.
Oil supertankers, known in the industry as very large crude carriers, or VLCCs, can measure a quarter of a mile in length and haul about 2 million barrels of crude. Since the beginning of 2017, the Organization of Petroleum Exporting Countries and its allies have sought to reduce oil production by almost 1.8 million barrels a day, curbing exports and business for tankers on key trade routes. The group in June plans to revisit the cuts, which currently run through the end of the year.
Crude exports from OPEC’s Persian Gulf members last month dropped below 18 million barrels a day for the first time since August, tanker-tracking data compiled by Bloomberg show. In particular, observed shipments declined to China and Japan from Saudi Arabia, Iran and the United Arab Emirates.

Hess Reports Five Nice Completed DUCs -- January 10, 2018; New Operator In The Bakken

Active rigs:

Active Rigs533658167193

Three new permits:
  • Operator: XTO
  • Field: Heart Butte (Dunn County)
  • Comments: XTO has permits for a 3-well pad in NWNE 10-148-92;
Six producing wells (DUCs) reported as completed:
  • 28900, 287, Future Acquisition Company, LLC, BJNJ 19-18N-1H, Big Dipper, Bakken pool,  t12//17; cum --
  • 31421, 2,153, Hess, EN-Leo E-14-94-2423H-9, t12/17; cum --
  • 31422, 1,894, Hess, EN-Leo E-154-94-2423H-8, t12/17; cum --
  • 31717, 1,008, Hess, EN-Leo E-154-94-2423H-11, t12/17; cum --
  • 31718, 2,443, Hess, EN-Leo E-154-94-2423H-10, t12/17; cum --
  • 33273, 2,838, Hess, EN-Leo E-154-94-2423H-12, t12/17; cum -- 
Three permits renewed:
  • Petro-Hunt: one State permits in McKenzie County
  • Newfield: one Gariety permit in McKenzie County
  • Hunt: one Patten permit in Mountrail County
One permit canceled:
  • MRO: a Juliet permit in Dunn County
Comment: first mention of Future Acquisition Company, LLC, in this blog, I believe. See this post.

US Crude Oil Inventories Decreased Almost 5 Million BPD -- EIA -- January 10, 2018 -- Re-Balancing Down To 23 Weeks

EIA weekly petroleum report:
  • US crude oil inventories decreased by 4.9 bbls (significantly different than what API reported yesterday afternoon)
  • US crude oil refineries operated at 95.3% capacitiy
  • gasoline production decreased, averaging about 9.3 million bpd
  • interestingly enough, distillate fuel production also decreased, averaging 5.3 million bpd
  • gasoline product supplied up slightly during same period last year (graph at this link; scroll to bottom of that link)
Re-balancing: down to 23 weeks --

Weeks to RB
Week 0
Apr 26, 2017

Week 1
May 3, 2017
Week 2
May 10, 2017
Week 3
May 17, 2017
Week 4
May 24, 2017
Week 5
May 31, 2017
Week 6
June 7, 2017
Week 7
June 14, 2017
Week 8
June 21, 2017
Week 9
June 28, 2017
Week 10
July 6, 2017
Week 11
July 12, 2017
Week 12
July 19, 2017
Week 13
July 26, 2017
Week 14
August 2, 2017
Week 15
August 9, 2017
Week 16
August 16, 2017
Week 17
August 23, 2017
Week 18
August 30, 2017
Week 19
September 7, 2017
Week 20
September 13, 2017
Week 21
September 20, 2017
Week 22
September 27, 2017
Week 23
October 4, 2017
Week 24
October 12, 2017
Week 25
October 18, 2017
Week 26
October 25, 2017
Week 27
November 1, 2017
Week 28
November 8, 2017
Week 29
November 15, 2017
Week 30
November 22, 2017
Week 31
November 29, 2017
Week 32
December 6, 2017
Week 33
December 13, 2017
Week 34
December 20, 2017
Week 35
December 28, 2017
Week 36
January 4, 2018
Week 37
January 10, 2018